Christine Lagarde has been found guilty of negligence in approving a massive payout of taxpayers’ money to controversial French businessman Bernard Tapie but avoided a jail sentence.

A French court convicted the head of the International Monetary Fund and former government minister, who had faced a €15,000 (£12,600) fine and up to a year in prison. But it decided she should not be punished and that the conviction would not constitute a criminal record. On Monday evening the IMF gave her its full support.

Lagarde, who has always argued she did nothing wrong and acted “in the public interest”, was not present for the judgment. Her lawyer Patrick Maisonneuve said she had flown back to Washington DC, where the IMF is based.

Within hours of the court’s decision, the IMF’s 24-member board convened a meeting to discuss Lagarde’s future. On Monday evening the IMF’s Washington-based executive board gave Lagarde its full support.

“The executive board looks forward to continuing to work with the managing director to address the difficult challenges facing the global economy,” the board said in a statement.

The IMF’s shareholders were aware of the pending court proceedings when they appointed Lagarde to a second five-year term earlier this year and were weighing up whether she – and the IMF – had suffered lasting reputational damage. The decision not to impose any penalty despite the guilty verdict was seen by some observers as enhancing the chances of the IMF’s managing director holding on to her job.

Support for Lagarde came from the former US Treasury secretary, Larry Summers, who said it was a “sorry day for French justice”. Lagarde was the “best thing” to happen to the IMF in a long time, Summers added.

Lagarde had appeared before theCour de Justice de la République, a special tribunal set up to judge ministers and public officials for alleged crimes committed while in office. It is made up of three professional judges and 12 politicians from the French houses of parliament.

It was only the fifth time the court had sat and its judgments cannot be appealed against.

Lagarde’s lawyer Patrick Maisonneuve told journalists after the judgment: “We would have preferred an acquittal, but it should be remembered that the court has not imposed any sentence whatsoever.”

The Tapie case has rumbled on since 1993 when the businessman sold his majority share in the sportswear company Adidas to Crédit Lyonnais, a bank then part-owned by the French state, to avoid a conflict of interest when he took up a government post. Tapie accused the bank, which later sold the shares at a higher price, of defrauding him by undervaluing his investment.

Lagarde was the finance minister under Nicolas Sarkozy between 2007 and 2011, when she became head of the IMF – replacing her disgraced compatriot Dominique Strauss-Kahn, who had been put on trial for attacking a New York hotel maid. She referred the case to a private arbitration panel, which awarded Tapie more than €400m. She was accused of “negligence with public money” for having paid up and not contested the award, which experts had advised against.

She denied any wrongdoing and claimed she had not seen all documents suggesting the payout should not be made. Six others, including her former chief of staff Stéphane Richard, now head of telecoms giant Orange, are being investigated for fraud. All have denied acting illegally.

Tapie has since been ordered to pay back the €400m but is appealing against the decision.

Detectives have spent years trying to establish if the award was given to Tapie under Sarkozy’s orders in return for the businessman’s support in his successful 2007 presidential campaign.

The IMF has 24 voting board members who represent 189 countries. It recently voted to give her a second term. Lagarde won the first time despite widespread criticism that the organisation has failed to appoint a non-European leader in its 72-year history.

Lagarde had the backing of then US Treasury secretary Tim Geithner whose support denied the job to Agustín Carstens, current governor of the Bank of Mexico, who will be a strong candidate to replace Lagarde if she is made to go. Carstens is set to become general manager at the International Bank of Settlements in Basel, Switzerland next year.